Consumer Price Index - CPI

Loading the player...

What is the 'Consumer Price Index - CPI'

The consumer price index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in CPI are used to assess price changes associated with the cost of living.

Sometimes referred to as "headline inflation."

BREAKING DOWN 'Consumer Price Index - CPI'

The U.S. Bureau of Labor Statistics measures two kinds of CPI statistics: CPI for urban wage earners and clerical workers (CPI-W), and the chained CPI for all urban consumers (C-CPI-U). Of the two types of CPI, the C-CPI-U is a better representation of the general public, because it accounts for about 87% of the population.

CPI is one of the most frequently used statistics for identifying periods of inflation or deflation. This is because large rises in CPI during a short period of time typically denote periods of inflation and large drops in CPI during a short period of time usually mark periods of deflation.

To learn how to take advantage of Inflation, read How to Profit from Inflation and The Consumer Price Index: A Friend to Investors.

RELATED TERMS
  1. Headline Inflation

    The raw inflation figure as reported through the Consumer Price ...
  2. Basket Of Goods

    A relatively fixed set of consumer products and services valued ...
  3. Consumer Price Index For All Urban ...

    A measure that examines the changes in the price of a basket ...
  4. Market Basket

    A subset of products or securities that is designed to mimic ...
  5. Chain-Weighted CPI

    An alternative measurement for the Consumer Price Index (CPI) ...
  6. Consumer Price Index For Urban ...

    A variation of the consumer price index, as complied by the Bureau ...
Related Articles
  1. Forex

    The Consumer Price Index

    Find out how this economic measure can help you make key financial decisions.
  2. Options & Futures

    The Consumer Price Index: A Friend To Investors

    As a measure of inflation, this index can help you make key financial decisions.
  3. Retirement

    Economic Indicators: Consumer Price Index (CPI)

    By Ryan Barnes Release Date: Monthly, approximately mid-month Release Time: 8:30am Eastern Standard Time Coverage: Previous ...
  4. Retirement

    Inflation: How Is It Measured?

    Measuring inflation is a difficult problem for government statisticians. To do this, a number of goods that are representative of the economy are put together into what is referred to as a "market ...
  5. Professionals

    The Consumer Price Index & Inflation

    CFA Level 1 - The Consumer Price Index
  6. Forex

    How CPI Affects the Dollar Against Other Currencies

    The Consumer Price Index is a broad measure of inflation, and inflation can have a dramatic impact on a currency's value against rival currencies.
  7. Economics

    Should You Worry About the U.S Inflation rate?

    Understand how inflation is measured, how U.S. inflation compares to other countries, and if investors should be concerned with rising inflation.
  8. Economics

    What Does Price Level Mean?

    Price level is the average of all current prices for goods and services in an economy.
  9. Bonds & Fixed Income

    CDs Vs. Inflation: Are They Keeping Up?

    Learn how to determine whether the money invested in certificates of deposit (CDs) can keep pace with the rate of inflation and how you measure inflation.
  10. Economics

    Understanding Statistics

    Statistics provide the means to analyze data and then summarize it into a numerical form.
RELATED FAQS
  1. How does the Bureau of Labor Statistics determine the Consumer Price Index (CPI)?

    Changes in the average price level of more than 200 goods and services across the U.S. economy are used to determine the ... Read Answer >>
  2. What are some limitations of the consumer price index (CPI)?

    Explore some of the basic limitations of the widely used economic indicator, the consumer price index, or CPI, and examine ... Read Answer >>
  3. Does the consumer price index (CPI) correlate with the change in price of goods and ...

    See why the consumer price index is a questionable proxy for inflation, and why it is unlikely to represent experiences with ... Read Answer >>
  4. Will the consumer price index (CPI) be updated or revised in the future?

    Learn about the consumer price index (CPI) and understand how its purpose and calculation make it necessary to continually ... Read Answer >>
  5. Is the consumer price index (CPI) the best measure of inflation?

    Discover how the CPI is one of the most used indexes to measure inflation, but due to its limitations, the PPI and GDP deflator ... Read Answer >>
  6. How is the basket of goods selected for the Consumer Price Index?

    Read about alterations in the market basket for the consumer price index, a measure of approximate consumer price changes ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center